ORIGINAL RESEARCH, LEGAL AND STRATEGIC ANALYSIS OF CURRENT NEWS, LEGAL, ECONOMIC AND POLITICAL AFFAIRS FROM PROMINENT NEW YORK BUSINESS LAWYER, BITCOIN DEVELOPER AND REAL ESTATE BROKER. COPYRIGHT 2009-2015 ERIC DIXON. ALL RIGHTS RESERVED. ATTRIBUTION REQUIRED.

Tuesday, February 28, 2012

A Georgetown Law School student shamelessly declared before a House subcommittee today that the approximate $3,000 cost of birth control during her law school tenure threatens to bankrupt her. (Oh, but the tuition won't?)This is the outgrowth of President Obama's recent mandate that religious institutions cover the cost of birth control for female employees. Now we have people asserting the right to have other people pay for them to avoid the possible consequence of an unwanted pregnancy from sex.

Some Democrats supporting the contraceptive mandate are framing this as a health issue. This is misleading, if not outright deceptive and insultingly so.

One can avoid the unwanted consequences -- i.e., pregnancy -- of not having or using contraceptives; one merely only avoid having sex. Modern science has yet to allow women to spontaneously conceive. As unpleasant or annoying as it may be, abstinence is an option. No one is forcing these women to have sex, although from some rhetoric one would be excused for believing these women just can't help themselves. (There is another hidden agenda here and it's all about economic power and some sort of gender war.)

But contraceptives should not -- not ever -- be equated with a health issue. Using contraceptives and having sex are choices. Having cancer is not a choice. Now there's a health issue, a life-and-death issue at that.The implication from the mandate supporters leads to the conclusion that there is an unfettered -- and perhaps even Constitutional -- right to have sex, free from having to take responsibility for it. This means not having to pay for it -- and the right to impose upon others (that means, men) the obligation to pay for it instead.What's next? What about subsidizing sex aids and other enhancements that increase the pleasure of participants? Why should women have to have a substandard experience? Let's subsidize vibrators, anal beads and lubricant. Isn't there a right to a super orgasm?By the way, what other obligations might men have? Forget the risk of a fake rape claim; now the man might get prosecuted if the woman feels humiliation because her experience was less than satisfactory.As a matter of fact, we should have the government guarantee that every lonely woman gets a hookup of her own choosing. Beefcake for everyone! (Ah, but only for the ladies; oh, wait, I hear the gay rights lobby complaining now. Beefcake for every woman and gay man; straight men, wait for the check.) Next, we'll have government subsidized strip clubs, porn and swingers' clubs. After all, Griswold v. Connecticut now holds that the government can't go into the bedroom, so when the bedroom is everything, it's sex whenever and wherever you want -- and other people will pick up the tab. Maybe the government should get into the business of guaranteeing a happy long term relationship for every woman -- and gay man -- terminable at her/his own choosing. Okay now, we'll have a new range of shotgun weddings (er, civil unions, or just hookups -- whatever!). Remember, gents, to perform, be polite, and don't ever complain about the check.Eric Dixon is a New York lawyer and satirist. Sadly, the issue underlying this article -- the serious and likely unconstitutional infringement upon the core constitutional right of religious freedom by the government mandate that religious institutions provide a full subsidy for contraception to employees enrolled in their health insurance plans, in contravention of long-established religious doctrine -- is not satire.

Monday, February 27, 2012

The following report indicates that the Internal Revenue Service may be targeting for scrutiny -- and trying to deter the operation of -- certain conservative political groups, like some Tea Party groups, which have applied for tax-exempt status under Section 501(c)(4) of the Internal Revenue Code. This section provides that an organization's net income can be exempted if the IRS determines the organization is organized exclusively for social welfare purposes, even if it engages in some political activity. Of course, political organizations can avail themselves of other exemptions such as that under Section 527.

The report is alarming, however, because it includes details of the IRS sending long, specific questionnaires to Tea Party groups asking for invasive information about individual members. Now, there is no right to an exemption from a particular law or regulation; however, Americans are used to the Fourteenth Amendment equal protection principle giving rise to the expectation of equal treatment by the government of all comers similarly situated. Are similar community groups, such as Occupy Wall Street, treated with the same level of scrutiny? If not, the disparity raises the specter of organized political reprisals for certain political views, of what becomes content-based enforcement targeted at certain people whose views may be considered "unpopular."

The possibility that the government's regulatory power may be used to favor certain speech and disfavor certain other speech (like that of the Tea Party) clearly has serious First Amendment concerns.

Already, courts have long struck down laws which target certain conduct or content of speech. Here, however, the nascent claim will be one of content-based enforcement; that is, focusing government enforcement resources on certain organizations with a decided bent towards reducing government waste and the public payroll.

While Tea Party organizations -- and numerous other social organizations -- have several options for tax treatment and generally can find ways to avoid having membership fees and other benign receipts treated as "taxable income," organizations receiving detailed inquiries and wishing to preserve the confidentiality of their operations should seek qualified legal counsel -- such as the author -- who can represent them and explain patiently the nature of the organization, its activity and its purposes.

Eric Dixon is a New York lawyer with a strong background in securities and corporate law, private equity transactions, government regulations, government investigations and corporate investigations, and election law. Mr. Dixon has represented several dozen political candidates and organizations, including a few Tea Party organizations, on various matters including ballot access, voter fraud and other legal issues.

Wednesday, February 22, 2012

Much has been made of the increasingly-obvious redistributionist tendencies of our government and public sector which are dividing our society into two camps. As financier Ziad Abdelnour has written in his new book, "Economic Warfare" (Wiley, 2011) (recommended), America is the battlefield for a momentous struggle between the wealth creators -- the entrepreneurial class -- and those who feel entitled to take your wealth away.

This is not a struggle between rich and poor. That is an intentional -- and effective -- deception, the use by the "takers and fakers" of doublespeak in rhetoric to deceive people into choosing to fight on the side of the "makers." You can be quite poor, or certainly in the middle class, and still be plagued by the entitlement mentality of those who feel entitled to take - by any means necessary - what little you have. A poor person who has "something" can be victimized just as much; in fact, the poor person may be more vulnerable, for he is the low-hanging fruit who likely will be thought to be without the resources (money, knowledge or mental strength) to resist and fight.

Conversely, the rich are not necessarily the white hats here. Some rich folks become that way, not by creating wealth, but by taking it from others. Call it stealing, call it legal plunder, but it is taking it from you nonetheless. It is different from the act of a thief, the mugger who robs you at gunpoint, only in the form of the weapon.

The gunman uses a weapon that can kill. The crony capitalism we see today uses special treatment bestowed by today's government decisionmakers (who soon will be in the private sector) upon their private sector friends. This crony capitalism uses the four corners of the law to cover the tracks of unfair and inequitable treatment. Equality of opportunity and a fair playing field are concepts to be honored, in the breach.

The most dangerous strategy of all is crony justice, which employs the government's most terrifying power of being able to threaten to deprive you of your freedom. It is the power to prosecute you - worse that overregulating or taxing you to induce you to move or close your business - that is the latest "daisy cutter" weapon.

The danger of the entitlement mentality is that its nature as a philosophy, an outlook, induces the temptation to reason with it, to negotiate, to use passive means of resistance. But there is no reasoning, no negotiating, that is effective with an enemy which seeks to take what you have at will, to expropriate and confiscate, until there is nothing left.

We are already in a civil war.

Eric Dixonis a New York lawyer who handles and is highly experienced in investigative matters, financial and corporate due diligence, and securities and corporate law matters.

Monday, February 20, 2012

The talk about fear of a coming economic catastrophe usually comes from the highly-educated and wealthy sectors of our economy, people generally in a position to know. These people have access to many other people, whose wealth, positions and connections make them important barometers of society's true economic health. Their actions, their fear, can and does move the markets.

The fear of economic collapse has been chronicled in the last four years by many polls of the working classes, the middle class, the so-called professional class -- this means just about all lawyers, doctors and medical professionals, anyone not owning a business and making a salary or a draw on a partnership -- who are afraid of the bottom dropping out.

But what about that large segment of the society that is on the public government payroll, the ones who are subsidized by the taxpayers? What about those who simply get subsidized by the government for not working -- a permanent "moochers" class, if you will? What if they are just as fearful?

In a true economic collapse, wouldn't the "moochers" fare worst of all? After all, they are dependent on others, either by necessity and circumstance (e.g., the single mother with several children and no extended family for support) or through habit and sloth. Whatever the reason, they have the least self-sufficiency, the least independence, the least readiness to respond adequately to a crisis to help themselves or their loved ones.

The public employees, that class of people whose members are often derided for their relative lack of industriousness (plain English translation: they're often damn lazy) and inversely proportionate (and perverse) sense of entitlement and arrogance, depend and count on their union pensions for their future. Except that many municipalities are near bankrupt and many states and cities are grossly underfunding their employees' defined benefit plans (which shortfall may be made up by taxpayers). What if those pensions are broke when these employees retire?

What if there is no one left tomorrow to tax?

Perhaps, just perhaps, the "moocher" class is grabbing all it can today, all the freebies and bennies (Jersey shore slang for "benefits") it can take now, because instinct tells it that there will be none tomorrow.

Perhaps, just perhaps, this sickening demand for free things -- like free contraceptives that are free for the users but expensive for everyone else -- is a sign of economic rationality. Just like the over-the-hill (allegedly) 36-year-old woman who tried to extort money from alleged lover, New York Yankees general manager Brian Cashman; that could also be said to have been economic rationality if not criminal extortion.

The hoarding and selfishness are rational behaviors. The question for the rest of us who actually work to survive and provide for our loved ones is what our response will be, as the world moves towards economic war.

Saturday, February 18, 2012

If you're worried about crony capitalism, meet its new bastard twin crony justice, in the form of what lookslike one of the most feared institutions on the planet getting its way with federal prosecutors as to which of its former employees would get criminally charged for acts which are more appropriately called civil torts in the vein of breaches of contract. Fortunately, saner heads in the form of New York federal appellate judges have prevailed.

A former Goldman Sachs computer programmer who stole publicly-available computer source code was acquitted by a three-judge federal appellate court in New York Thursday in an unusual move. The Second Circuit Court of Appeals panel, including my old Yale Law School dean Guido Calabresi, reversed the 2010 conviction of Sergey Aleynikov and ordered a directed judgment of acquittal. This means Aleynikov cannot be retried, which is an option for prosecutors when a conviction is overturned on legal grounds.

The most comprehensive coverage, with background, of this case has been from Forbes.com white collar crime blogger Walter Pavlo, whose report is here.

This entire prosecution begs one question: Did Goldman Sachs play a role -- never mind a totally inappropriate and scary role -- in getting Aleynikov prosecuted?

I await the opinion -- as do other commentators. What's interesting is that while briefs were submitted weeks ago in advance of Thursday's oral arguments, the appellate court panel's ruling came down within hours. This suggests an obvious legal problem -- and one which should have been obvious to federal prosecutors and which further warrants an examination into the decisionmaking process that led to this prosecution even being brought.

By extension, there is another problem: the mentality of win-at-all-costs in some prosecutors' offices that leads to some cases being indicted, tried and won, even when it is fairly clear that the hapless defendant is actually innocent or that the conduct of which he (or she, in rare cases) was accused is not actually a federal crime. One root cause of this is the current recession -- which in the legal industry is a depression and structural realignment. The fear of legal career oblivion is surely leading to some prosecutors bringing cases to impress future private employers, with plenty of innocents as acceptable collateral damage.

The background of the Aleynikov prosecution deserves an internal review, if not formal investigation within the Department of Justice. That department's mandate is to achieve justice, not to advance the narrow political and career objectives of its employees -- or of favored status crony corporations and other special interests.

Eric Dixonis a New York investigative lawyer with substantial private equity, securities, corporate and election law experience. Mr. Dixon has been developing a book on crony justice and strategies for developing the mental strength to fight it.

Louis Manzo should be an example of what a determined defendant, and his counsel John Lynch, can do to fight for one's legal innocence. But make no mistake: Manzo has paid a heavy price already. Now, in a statement evoking memories of Raymond Donovan's plaintive plea after his acquittal in the Wedtech corruption trial in the late 1980s, saying "Which office do I go to get my reputation back?" Manzo is now quoted as saying, "Hopefully I can get my life back."

Too many people -- in both civil and criminal cases -- lack the mental strength to fight to win the case and just say, "I give up." This has harmful consequences. The more people don't fight back, the more we will have very bad cases brought, because prosecutors, regulators and plaintiffs will assume that the defendants don't have the will to fight. But the bottom line is that having integrity, a solid legal case (necessary, but not sufficient by itself), and the mental strength to fight a long battle can go a long way to preserving one's good name.

Linares' decision shows district judges are increasingly skeptical of prosecutors' cases and their ever-expanding interpretations of criminal liability to criminalize conduct, businesses or people they simply don't like. (Skepticism also is rising among New York federal judges, including Thursday's recent judgment of acquittal of Goldman Sachs computer programmer Sergey Aleynikov by a three-judge appellate panel including my Torts law school professor and former Yale Law School dean Guido Calabresi.) Frankly, I believe the Bid Rig investigations were started as a hit job (against both select Republicans and Democrats) and essentially made any candidate for political office a presumptive criminal. (See my January 2010 article on this dangerous presumption of guilt.)

This is wrong and deters good people from running for office. Hmmm, that might be the purpose.

Eric Dixon is a New York investigative lawyer who counsels some clients on developing the mental strength to confront and survive an investigation, civil or criminal trial and the preparations for prison life for those facing imprisonment.

Thursday, February 16, 2012

As sports fans, our favorite teams and players often take us back to the innocence of our youth, when the exploits of those teams and players were paramount in our lives. These memories are often preferred to the current troubles of today, where we are beset by tremendous economic uncertainty and more than a lingering fear that our best days -- no matter our age or status -- are behind us.

Gary Carter was one of the all-time greats as a baseball catcher. I submit he was one of the five all-time greats at that position, which is uniquely demanding both mentally and physically.

However, Carter distinguished himself with his infectious laughter and desire to help those around him succeed. He never withdrew within himself, but made everyone around him feel better and part of the action. He was an extrovert who genuinely cared about the team, about the others.

To baseball Hall of Famer Gary Carter, one of the legendary heroes of the 1986 World Series Champion New York Mets, Godspeed.

Friday, February 10, 2012

The only way housing will recover is for all government intervention in the housing market to stop, allowing foreclosures to occur and prices to fall as quickly and as far as necessary to achieve an equilibrium between supply and demand.

In this October 2011 analysisI predicted that housing could fall between 50% and 80% based on these risk factors. All of these factors remain true today.

All government efforts to "fix" housing have failed miserably. Well, not entirely. The government has succeeded on two counts. First, it succeeded in wasting taxpayer money through its plan to pick winners and losers. Here, the winners were sellers getting sale prices at still-inflated prices, and the banks holding and servicing the mortgages; they got the money transferred from taxpayers funding the homeowner "assistance." Second, the government succeeded in favoring existing and past sellers, who got higher prices than they otherwise would have gotten had prices not been artificially supported. However, their windfall came at the expense of current buyers in the market who still risk paying inflated prices for homes which are very likely to continue to fall substantially in price.

Note what I wrote at the end of the foregoing paragraph: "inflated prices...very likely to continue to fall substantially."

The Obama Administration's homeowner rescue plan announced Thursday was quickly panned by analysts and commentators who understand the housing market. Their criticisms were largely that the payouts to foreclosed owners and victims of robosigning (all of whom have also, remarkably, been delinquent on their mortgages) do little to help any individual homeowner, do little to support prices, transfer large amounts of money from the banks (who will make future borrowers and current depositors pay) to recipients who will individually benefit little if at all, and do little or nothing to prevent the risk of future default if prices continue to fall.

The government expects home prices to still fall substantially. If it didn't, it would not be worried about supporting prices in the face of the three-year-long foreclosure backlog in states, like New York and New Jersey, in which foreclosure is a judicial system process. They know there is a huge backlog of homes ready to hit the market over the next few years, and these distressed sales will someday be pushed through by desperate homeowners or banks. This has to -- absolutely must -- pull prices down on the simple laws of supply and demand. And even if the government tries price supports by boosting demand, that will just push demand forward, at the expense of demand tomorrow, leading to a delayed price drop.

In essence, what the government's tragically misguided policies for price support has done is prolong the period during which prospective buyers expect -- and fear -- significant future price declines. No buyer in his or her right mind will buy any nonconsumable asset (like a car or computer with a short economic life) knowing it will most likely be worth much less in the near future. Because the government is delaying -- but not preventing -- the huge price correction I predicted here -- the financial sector cannot recover, the overall economy will not recover, and people who were unemployed in 2008 are still unemployed today and likely will remain unemployed or underemployed for years to come.

Had the government -- and the banks -- bitten the bullet in 2008, we would have had a sharp recession. But the recovery would already have occurred.

Those people unemployed today for the last three years would likely be employed today and enjoying the fruits of that recovery -- which the government has succeeded in delaying just as much.

Ask those people if they're better off today than they were four years ago.

Eric Dixon is a New York corporate lawyer and member of the Board of Directors of the Financial Policy Council, Inc. The views here are his alone.

Wednesday, February 8, 2012

President Obama's edict that religious institutions must pay for contraceptives for female employees is an unconstitutional infringement upon the exercise of religion. Tragically, the Obama Administration now seeks to pick winners and losers, not only in the justice system and our economy, but now on matters of faith.

The danger of the edict is the mandate that religious institutions must pay for the cost of contraceptives. This is a compulsory new "cost of doing business" and as such, burdens religious institutions both financially (with the cost) and spiritually (by forcing the institutions to act in ways contrary to their faith). The constitutional test is that such burdens on such "bedrock" First Amendment rights must survive a "strict scrutiny" test when evaluated by courts, which will examine whether such impositions can be achieved using a method less burdensome on such a fundamental, protected right to the free exercise of religion.

The "free exercise of religion" is interpreted to mean more than the mere freedom of a religion from overt government persecution. The concept -- as with the concept of virtually all rights in an age of the "living Constitution" -- has expanded to include all sorts of actions. In fact, it has been expanded by some aggressive judges (and surely with the cooperation of some inept or less than enthusiastic advocates for the side of a restrained, traditional interpretation) to become an entitlement to certain privileged status. The New York City Landmark Preservation Board's unique 2010 denial of landmark designation for the planned site of the planned "Ground Zero Mosque" has been lauded -- incorrectly -- as an example of the government's respect for religion, when in fact in has acted as an unconstitutional government preference for a certain religion, a preference which by its nature acts as an unconstitutional disfavoring of non-preferred, lesser faiths.

A larger and also disturbing issue is the assertion that women are entitled to have religious institutions pay for their contraceptives, an assertion which implies that the religious institutions are obligated to pay, despite or in fact because of their religious objections to contraception. The core issue at dispute here is the question of who gets stuck with the bill for the contraceptives; women are free to get and use contraceptives, but that does not mean -- horror of horrors -- that women who want them get them for free (and get to stick the Roman Catholic Church or other religious employers with the bill).

Whether the Roman Catholic Church -- the largest singular religious institution in our nation -- or other institutions are correct on contraception is a matter for their respective religious doctrines and is beyond the scope of this article. However, these institutions are on the most solid ground in objecting to the claim that others are entitled to contraception on the dime of devout believers who object on moral grounds to contraception. Under these circumstances, the Roman Catholic Church is rightfully taking a lead role in fighting the culture of the free ride, the culture of demanding an entitlement and passing off the obligations to fund it to others -- to the suckers -- within our society.

The reality -- what in Europe was commonly called realpolitick -- is that the Roman Catholic Church and other prominent religions are being punished for the audacity of asserting their primacy on issues of faith. Religious leaders recognize that holding firm on doctrinal issues comes with a price under the Obama Administration, which is making its intolerance for disobedience of the Federal Government well known. It is not an exaggeration to claim that the Obama Administration is pressuring faiths to conform their doctrine and practice to the arbitrary (and some argue, immoral) government policy, or otherwise suffer the pain of a government mandate. It is no longer an exaggeration to fear that the Obama Administration's dictates are the first wave of the persecution, by subjugation through regulation, of organized religion which refuses to modify faith-based doctrine to the demands of secular elected leaders.

Eric Dixon is a New York lawyer and strategic consultant who works with entrepreneurs, investment vehicles, political candidates and select individuals on a variety of legal, political, and investigative matters.

Sunday, February 5, 2012

New Jersey Governor Chris Christie's recent proposal to cut state income taxes by ten percent -- amounting to a less than one percent cut in a taxpayer's average cumulative tax burden -- is a bad idea that would further shift the burden of New Jersey's bloated government bureaucracy onto state homeowners who already have the highest property taxes in the nation.As this recent Tax Foundation report illustrates, New Jersey has the highest property taxes, highest combined state and local taxes, fifth-highest corporate income tax and sixth-highest personal income tax rate in the nation.An income tax is preferable to, and fairer than, a property tax. After all, property taxes are a tax on an asset, i.e., your wealth, which you already bought using dollars left over after you originally had your income taxed. Property taxes have the effect of double taxation. At least an income tax is a tax on current income, meaning it is theoretically accounting for (someone else's subjective, arbitrary judgment about) your current ability to pay tax. Christie's proposal sounds great. He is the YouTube Governor, the reluctant candidate of whom commentators increasingly whisper that there are facts yet to be revealed which are deterring him from a 2012 White House bid. (Source: Bloomberg TV's post-Florida primary coverage this past Tuesday night.) But like almost everything he says and does, the rhetoric that plays well on YouTube (now, there's a high bar) fails to translate into anything great -- or good -- when implemented. By proposing an income tax cut without accounting for corresponding budget cuts, Christie would shift the burden for services to the municipalities which...you guessed it...fund themselves with the property tax. Moreover, when the decisionmakers at the local level have to choose between funding salaries and benefits for friends and family on the town payroll, and actually providing services (salaries for actual workers plus capital expenses), guess which one they will choose? (Incidentally, it is the local control and ability for elected officials to stuff town payrolls with friends, family and other supporters and thus buy their reelection votes, which I contend is the root of the "legal plunder" of New Jersey's homeowners and private sector to increasingly fund a bloated, inefficient and often unnecessary public sector.) The bottom line is that while New Jersey Governor Christie touts his record of fiscal conservatism, New Jersey homeowners face the triple pincers of rising property taxes, declining services and -- in many suburban towns -- declining state funding for local schools (funded by the income tax) which (as explained by Star-Ledger columnist Paul Mulshine here) was designed to offset the property tax burden. Is it any surprise, then, that New Jersey is ranked DEAD LAST in the nation in state business tax climate -- behind even 49th ranked New York? PS: I am not in the habit of citing Star-Ledger editorials, but here I agree with them. Eric Dixon is a New York corporate lawyer.

Dixon Investigation Gets Powerful New Jersey Politicians To Run From Camera. Watch this report to see one mayor run from cameras while another nationally-prominent governor gets quiet. Political big shots are no match for Eric Dixon's methodical investigations and confrontational, adversarial approach.